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Department of Justice squeezed in credit case

Judge unconvinced at strength of DOJ’s arguments.

CAPE TOWN – Judge Siraj Desai on Tuesday dismissed as “limp” an argument submitted by the Department of Justice (DOJ) as to why emoluments attachment orders (EAOs) should not be subject to the oversight of a magistrate. 

Denzil Potgieter SC, representing the DOJ in the Western Cape High Court, argued that where debtors who had defaulted on their debt repayments consented to an EAO to repay their debts, it would be irrational to then require already overburdened magistrates to scrutinise these EAOs. 

In an application brought by the University of Stellenbosch’s Legal Aid Clinic (LAC), and being heard in court this week, it is however submitted that the lack of proper inspection by a magistrate when granting EAOs infringes debtors’ rights to dignity. Clerks of court, who in fact process EAOs, often make no enquiries into the lawfulness of the debt and pay no regard to whether the debtor can actually afford the deductions, according to the LAC.

At times, these deductions can amount to more than half a sole breadwinner’s salary or more, when multiple EAOs are operating.

Potgieter countered that where these abuses occurred, the Magistrates’ Court Act [MCA] allowed the debtor to approach a court to have the EAO reassessed or overhauled. “The need to check [the veracity of] consent arises only when there is a complaint [by the debtor],” Potgieter argued, noting there were sufficient safeguards in the current system.

The LAC, meanwhile, has argued in court papers that debtors often sign consents under pressure, false pretence or simply because they have not understood them properly.

Judge Desai said the problem of abusive EAOs had become endemic despite the remedies that exist. Many of those affected were part of the “unsophisticated working class”, Desai noted, implying they might not be fully aware of the redress available to them. He questioned whether careful judicial inspection was not of necessity required, despite the cost burden, in light of the alleged abuse.

DOJ urged to take action

Desai was critical of the “lack of urgency”, at least on the papers before him, on the part of the DOJ. That this abuse seemed widespread and the consequences of an unaffordable EAO compromised the survival of poor people called for urgent action, he said.

As an indication that the DOJ was not unconcerned about abuse, Potgieter pointed out that the department had laid criminal charges against magistrates courts where irregularities were exposed, such as in Ermelo and Britz. He said the DOJ was in the process of examining legislation to see how current “mischief” could be dealt with.

This involves a bill amending the MCA and currently under consideration by an inter-departmental task team involving the DOJ, the National Treasury and Department of Trade and Industry (dti). Among the amendments is a proposal requiring debt collectors to present, along with the written consent to judgement, documentary proof of the debtor’s financial position.

Clark Gardner, CEO of financial wellbeing firm, Summit, who was present in court on Tuesday, told Moneyweb that Summit had been lobbying the DOJ for the past ten years to make changes to the MCA to bring it in line with the Constitution and better protect consumers.

Potgieter said the constitutional challenges brought by the LAC were not urgent, since the applicants knew the DOJ, along with other ministers, was “working on the law”.

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